Background: A link between tissue iron and the risk of type 2 diabetes mellitus (T2DM) has been demonstrated across several diverse populations, usually as a relationship between diabetes prevalence and serum levels of ferritin, a marker of tissue iron. Importantly, risk increases through the entire range of normal ferritin. There is convincing evidence of beneficial effects of reducing iron in pathologic iron overload such as that seen in hereditary hemochromatosis or beta thalassemia, but the data in typical T2DM and in the normal ranges of ferritin are less clear-cut. We have demonstrated a benefit of dietary iron reduction in several mouse models of diabetes, and present data from a pilot trial in humans that also shows improvement of glycemia with phlebotomy. Dose responsiveness and time course of that benefit, however, are not known. Up to 60% of people with T2DM also have fatty liver, a condition that can progress to nonalcoholic steatohepatitis (NASH) and cirrhosis, liver failure and/or hepatocellular carcinoma. Like diabetes, NASH and ferritin are also associated, but the same questions of causality and reversibility have not been convincingly resolved. Hypothesis: We hypothesize that iron contributes to the pathogenesis and progression of T2DM and NASH, and that individuals with tissue iron levels, as reflected by serum ferritin, in the upper ranges of normal will benefit from reducing iron by phlebotomy to levels in the lower ranges of normal. The benefit will be manifest by improvements in glycemia resulting from improvements in both insulin sensitivity and insulin secretory capacity, and decreases in indices of liver damage and inflammation in those individuals with NASH. Specific Aims: We propose a randomized, placebo-controlled trial at Wake Forest and UNC Chapel Hill to determine if there is a beneficial effect of iron reduction by phlebotomy on T2DM, prediabetes, and presumed NASH. We will test if iron reduction will improve: (1) Glycemia, with a primary outcome of improvement in HgbA1C 6 months after phlebotomy, and as secondary outcomes other measures of glycemia and Metabolic Syndrome; (2) Clinical indices of presumed NASH, primarily serum transaminases 12 months after phlebotomy, and also liver stiffness by elastography, and; (3) Insulin sensitivity and/or secretory capacity. Clinical impact: If positive effects could be demonstrated in a large and diverse cohort, with better definition of dose-responsiveness and treatment thresholds, this would define a range of optimal serum ferritin much narrower that the broad range of normal and justify widespread adoption of a simple, safe, inexpensive, and acceptable treatment modality (blood donation) for T2DM, prediabetes, and NASH in the large fraction of the population with body iron stores in the higher range of normal.